Insurer Allstate Corp. (ALL) Wednesday reported a nearly 45 percent drop in fourth-quarter profit, hurt mainly by steep claims arising from Superstorm Sandy.
Nevertheless, the company announced a raise in dividend as well as a new $1 billion share buyback program.
Allstate, which is the largest publicly traded home and auto insurer in the U.S., said results were impacted by losses from Sandy that lashed the US east coast end October, and caused loss of lives, and damaged property and public infrastructure.
Allstate's catastrophe losses for the quarter were $1.06 billion, compared with $66 million a year ago. Sandy ranks behind hurricane Katrina in terms of devastation, with insured losses pegged as high as $25 billion.
Northbrook, Illinois-based Allstate reported fourth-quarter net income of $394 million or $0.81 per share, compared with $712 million or $1.40 per share last year.
Excluding items, operating earnings for the quarter were $289 million or $0.59 per share, compared with $735 million or $1.45 per share a year ago.
On average, 25 analysts polled by Thomson Reuters estimated a loss of $0.05 per share for the quarter. Analysts' estimates typically exclude special items.
Consolidated revenues for the quarter rose 3.8 percent to $8.55 billion from $8.24 billion last year.
Property-liability insurance premiums for the quarter were $6.744 billion, compared with $6.605 billion in the prior year.
Analysts on consensus estimated revenues of $6.55 billion for the quarter.
Allstate CEO Thomas Wilson said, "...The Allstate branded business maintained strong auto profitability, dramatically improved returns in homeowners and began to reduce the negative impact on policies in force related to profit improvement actions..."
The company has been buying reinsurance, hiking prices and restricting sales of homeowners' coverage in certain places to curtail losses from catastrophes.
Property-Liability combined ratio for the quarter worsened to 101.7 percent from 90.9 percent in the prior year. A ratio below 100 percent indicates the company is making underwriting profit while a ratio above 100 percent means it is paying out more money in claims.
Book value, calculated by total assets minus intangible assets and liabilities, at the end of December 2012 was $42.39 per share, up 17.2 percent from last year.
Allstate raised its quarterly dividend by 13.6 percent to $0.25 per common share, payable on April 1 to shareholders of record on February 28.
Among others in the industry, Chubb Corp. (CB) last Thursday reported a plunge in quarterly profit, also hurt by losses from Sandy.
Allstate closed Wednesday at $44.31 on the NYSE. In after hours, the stock gained 2.80%.
by RTT Staff Writer
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